Pensana Share Discussion Threads

[yumyum] 05/11/2020 22:23

My post above is not very clear. Apologies. What I meant to question is dilution re Angola - $45m out of $300m capital cost (if China partner steps up and is good enough) plus $xxx m for 'UK refinery' - paid for by Pensana entirely or xx% with a partner like EU or UK government.

[yumyum] 05/11/2020 22:14

I edited my earlier post a bit.

[yumyum] 05/11/2020 22:13

hey China. Are you about to post another price chart for REE for delivery tomorrow....for a mine that might start in 2024 ?

[chinasyndrome] 05/11/2020 22:08

Yumyum, are you sure your not related to Donald ?

You seem to be running by his playbook. Cast doubt, Ignore facts, refuse to answer questions, raise unfounded concerns, not shut up when you have lost the argument...!

[yumyum] 05/11/2020 22:00

Hi herlat1, big share dilution because the company needs to raise something like US$500m altogether (my guess). Most of that apparently comes from their Chinese partner. The partner are not obviously involved in the 'UK refinery' (likely zero in fact) so the so-called 85% of....something...on some kind of unknown terms.....which looks to be now a MUCH more expensive processing route refers just to the Angolan mining and processing operation. I guess the Chinese partner must be in deep negotiations with Pensana. That leaves 15% of $300m....so US$45m...and a bit more if the 85% Chinese is not rocksolid (or too expensive in what they provide in infrastructure)....or a bit less if Pensana go back to their plan of only a few months ago to forget about the refinery.....or even less if they go back to their plan of only a few months ago that had a simpler processing route (presumably barely saleable in the market place they realise finally). ...plus a UK refinery (less UK govt subsidies). Let's call it a trebling of Pensana capital before the Angolan plant is built and the UK refinery is built.

BFS update is likely not an actual BFS. Not bankable...because there are a lot - too many - of unknowns still.

Lynas....I did not really study in depth. It looks a bit opaque....although they have a lot of knowhow/hands on experience in both engineering and marketing of course (unlike Pensana). No interest to invest in them (or MP).

[herlat1] 05/11/2020 18:59

YumYum why do you say there will be a big share dilution? There is no evidence at all as far as I can see that the company is going to change its laudable policy of keeping the register extremely tight.How did you go with your review if the Capital and Operating costs of Lynas's Western Australian processing plant. How much do you think it will cost?

[swanvesta] 05/11/2020 18:47

rvsy2, that's pretty much what I imagined. But I'm wondering if there is a bias for early studies to be more positive than later ones, or more cautious? For example how seriously can you take an NPV at PEA stage vs one at PFS or BFS?

I must emphasize this has nothing to do with PRE, in case anyone thinks I'm deramping. I'm talking about Wood's PEA/NPV for Solgold's Alpala project, which everyone on the SOLG board seems to be assuming is a shoe-in. It's hard to address these things on the actual board though, which like many of these boards is policed by a couple of rampant cheerleaders.

[yumyum] 05/11/2020 17:43

You will make money millwallfan. A lot depends on the BFS ...and the big share dilution....it could be very big...and take the far future price forecast of REE with a pinch of salt. They are not that rare.

[millwallfan] 05/11/2020 15:08

I have taken a fairly small stake here average 40p driven by the future potential and that almost exactly 50% of the shares are in the hands of top 10 shareholders including some leading investment houses/nominees who will obviously have undertaken some in depth research. At my age I can only look to the medium term for hopefully some substantial capital growth in less than 5 years. GLA. Comments appreciated on sensible potential in 3-5 years if all goes reasonable well.

[rvsy2] 05/11/2020 10:20

swanvesta

I will attempt to answer your question on the trend between PEA, PFS and DFS ( I prefer to use the term BFS rather than DFS as BFS signifies the document satisfies the requirements of financing institutions).

Capital and operating cost estimates are prepared as a mining project progresses in stages from an initial concept through preliminary economic assessment, pre feaaibility study, bankeable feasibiity study and on into into implementation.

The project definition i.e. mineral resource, mining method / plan, process flowsheet, infrastructure needs(power, water supply, transportation etc )improves as the project advances from concept to implementation thru geological and mining studies, metallurgical testwork, more detailed engineering design, quotations from equipment suppliers and construction contractors.

As the project progresses thru the various stages the accuracy level of the cost estimates is improved.

Organisations such as Wood Group are familiar with the project definition and accuracy levels of cost estimates required by financial institutions and work to industry norms.

Pensana's pre feasibility study stated that the cost estimates were prepared in accordance with AACE document 18R-97 which details what work is required as projects move from concept to implementation. I suggest that you look at this informative document.

You ask "Do projects tend to come in on time and budget ? "

Projects will not come in on time or budget if there are incompletely defined and/ or signifcant changes are made during implementation.

Hope above helps.

[swanvesta] 05/11/2020 08:21

As a general background question... How much can you rely on studies done by Wood, etc? Do projects tend to come in on time and budget? And what's the general trend between PEA, PFS, DFS etc... This is nothing specific to PRE, but something I got a heads-up about recently on another share where the worry is that a more detailed study will quash an overly-optimistic PEA.

[chinasyndrome] 05/11/2020 05:28

Not to be outdone by New York, Shanghai ups the Anti yet again.
When does a Dribble become a Flood ?

Latest Update in the China Rare Earth Oxides Market
Rare Earth Oxides prices
US Dollar

SMM Spot Price



Price description
Price Range
Avg.
Change
Date
Praseodymium Oxide (USD/mt)
48,434.11-49,181.55
48,807.83
+597.95
Nov 05, 2020
Neodymium Oxide (USD/mt)
54,862.1-55,460.05
55,161.07
+747.44
Nov 05, 2020
Gadolinium Oxide (USD/mt)
25,861.42-26,459.38
26,160.4
+149.49
Nov 05, 2020
Terbium Oxide (USD/kg)
747.44-754.91
751.18
+12.71
Nov 05, 2020
Neodymium-Praseodymium (NdPr) Oxide (USD/mt)
50,526.95-51,124.9
50,825.92
+298.98
Nov 05, 2020
Holmium Oxide (USD/mt)
64,429.33-64,728.31
64,578.82
+448.46
Nov 05, 202

[chinasyndrome] 04/11/2020 23:07

My guess is by Up-date they are talking about the Mine BFS.

Seeing as Wood have only recently been commissioned to do the study on "Up-stream" processing it is not plausible that they could release a full, ie totally inclusive BFS.

Which is fine by me, So long as the BFS update shows that the mine can operate at a profit, Stage two can only be cream on top,

[swanvesta] 04/11/2020 12:22

Are we getting the BFS or an update on the BFS in a fortnight's time?

[wiseacre] 04/11/2020 12:09

All these guesses are quite wild. We shall know a lot more in terms of discounted cash flows when we get the BFS in a fortnight's time. In the meantime I reiterate the stock is cheap particularly in relation to the limited competition.

[chinasyndrome] 04/11/2020 10:10

Hi Cyberbub, I took tax's, Partners share and OPEX/Finance etc into consideration in my calculation. And £5 is not that far from my lower estimate of A$10. :)

Looking at what might happen in "Looney Land" today, we might just possibly see a re-run of 2010-11, in which case we could be cashing out at $50-100

[herlat1] 04/11/2020 09:58

YUMYUM the problem that Lynas has is that it is being chased out of Malaysia by the greens due to waste disposal issues and has chosen to relocate in the middle of Western Australia, which it has been quite clear about is going to be a higher capital and operating cost and a very lengthy development timeline of ~4 years.

[cyberbub] 04/11/2020 09:21

China you may be right about $3bn of pre tax profit but you say yourself that this is over 10 years, so how can you then claim $15 per share?!If your figure is right then it will be $300M p.a., after taxes could be only $220M p.a. Put it on a p/e of 8 and, assuming debt is paid off quickly, you have a market cap of $1.75bn or £1.4bn. Assume 300M shares in issue (hard to tell at this stage, could be more) and that's an share price of about £5, roughly half what you suggest.Of course it's still a very nice return from 60p! :-)NAI

[scaramonga88] 04/11/2020 08:48

Haha! Damn you got me, little old granny investing in rare earth mines

[chinasyndrome] 04/11/2020 04:02

Yumyum, Until the Company publish's the BFS; those calculations are the best estimate I have for making my own Investment, it is called "Doing your own Research", and seeing that I have been in this Industry for most of my working life, I know where I can make assumptions and when somebody is full of BS !

Speaking of which, do you know where can I find the latest projections for MP and Lynas ? I would hate to think there were people like you being asked to invest in MP without having a full economic model to consider, or in Lynas without a timetable and budget for their next four years of activities ?

If your not confident to buy in till £1.50, might I suggest you don't even consider it, you obviously prefer established "Holes in the ground",, You might want to look again in 2025 !

[yumyum] 03/11/2020 23:02

Sacarramonga88......that is a bit silly I think. Hopefully you are not a granny.

[yumyum] 03/11/2020 22:59

...welcome to Chinasyndrome's (non-compliant) pre-feasability study !

Plenty of room for profit when I buy in again at £1.50 per share :-)

[chinasyndrome] 03/11/2020 22:29

Hi Scaramonga, I commend your enthusiasm but I am a little doubtful on several of those numbers: My own (Conservative ?)calculations come up with slightly different outcome: What is apparent is that if Demand/Price do what we are expecting then doubling the mining rate should double Profit/SP !

From the very first day I looked at Longonjo back in 2017, when the target was 1Mt TREO @ 20% NdPr; I really had very little problem in determining it's potential value:

200,000 t of NdPr at a substantially discounted $25,000/t = US$5B (forget about the By-products at this stage)
Assume a 50% loss in the mining & processing with a Refinery discount of 50% and another US$250M in Expenses and the Project was still worth around US$1B which then worked out at around US$1 per share back then when the share price was Au$0.016-0,02 per share !!!
A complete no Brainer, so I started buying

Three years down the track and after much drilling, we are now looking at at least twice the Ore resource, (still with plenty of upside).
We are now looking at a Process path that will probably recover around 90% of the "value" products to a marketable MREC
And we are now considering In-house up-stream processing to achieve 90% return from that MREC
The current price of NdPr is (US$50,000/t) double my original allowance; and looks to be rising almost daily
And we now have around 200M shares issued

So instead of US$5B we now have US$20B which after our own "In-house"processing will have a value of ~ US$16.2B
Which is a silly number as it will take 20 years to mine out that part of the Resource ~ so I cut it by a factor of 2 (bring back to 10yr)
Now deduct Mining ($200M), Processing ($2B) CAPEX ($1B), and Financial charges ($200M), Taxes ($1B), all taken over ten years leaves US$3.5B profit, deduct 15% for Partner and we are left with Company profit of around US$3B ie US$15 per share

Now admittedly, all of my calculations and estimates are "back of the hand" and could be way out, but given that there is still a huge amount of Up-side potential in: Resource (Coola & Depth), NdPr Price + By products, Government assistance (UK, Angolan) and the lowest cash rates we have seen in over 50 years ! I think I am not too far off the mark ?

IMO By the time you DCF that US$15 back to a NPV it should equate to a share price of around Au$10-15 per share,

And if you take it out to 20 yers using a 5% cash rate, I get Au$20-25 SP

Which is why nobody is getting any of my shares at least until they reach at least $10

The greatest risk when Investing in a mining project is to Ignore the Fundamentals !

[scaramonga88] 03/11/2020 20:06

Always good to get alternative views so we don't get too carried away!On another forum some punter has put together the following calcs from the FS:"The total income for NdPr is 178 billion dollars over 50 years. However so any resource value in the ground is 1/10 that gives say 17.8 billion (NdPr at $40,000 a tonne) divide by 50 = $356M before a mine actually gets built. Target 25% margin for Longonjo NdPr only, 35% with other REOs on top"So crude comparison to an established Lynas (regardless of cash reserve): Their annual last financial year was $305m turnover with a loss of $19m. In the last 4 years they have averaged $320m a year and an average net income of $27m, so averaging less than 5% marg.Their share price currently sits at around $3 a share with similar amounts of shares in circulation. If Pensana doesn't dilute and achieves 35% net profit on a $350m turnover from Longonjo alone thats a whopping $100m plus. Thats before we consider a rise in ndpr price, the fact they could double the production with a reduced mine life, plus the Coola potential and further exploration...Appreciate theres a very long way to go but I would be interested for someone who is more qualified than me to take a stab at what the potential stock price could be if the stars align??

[rvsy2] 03/11/2020 18:54

YUMYUM
I will look forward to reading what you have to say after we get the update on the BFS which is due by 16 November ( only 2 weeks later than planned).